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I think the "incompatible" part only affects the MYK's Download for USB Transfer feature (with regard to the 1st Gen Kindles). Provided it's not one of the specially formatted books that truly do require specific devices to read, it seems past (and new) purchases can still be sent to the K1 via Whispersync (and transferred to a PC to have the DRM removed and backed up).
Whether this is just a new "glitch" on the MYK webpage, or a "testing of the waters" in advance of a complete K1 phaseout remains to be seen. Too soon to tell, in my opinion. Meanwhile, there are still options to read past and present purchases on K1s and multiple options to back up DRM-free copies of purchases that will be compatible with K1s. That still bodes well in my book.
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